How to Manage Operational Risk in Financial Institutions

By Aaron Brown

Part of Financial Risk Management For Dummies Cheat Sheet

As a financial risk manager, one of the risks you need to consider is uncertainty within your own organisation. Institutional or operational risks are many – employee malfeasance, computer errors, attacks (physical or cyber), for example – and too numerous to list.

In managing operational risk, look to see how tight or loose the workplace is. Too loose a workplace leads to errors, inefficiency, bad discipline, frustration for talented employees, and damage from lazy or incompetent ones. Too tight a workplace leads to people hating their jobs, stress, and barriers to innovation; it can attract people who like to boss others around rather than do any work themselves.

To help change operational risk to opportunity, concentrate on business practices that make work fun, build a useful business, meet social needs and contribute to employee career development, personal growth and financial security.